Everston v. Central Bank of Kansas

• Citation: 33 Kan. 352,6 P. 605
• Parties: JOSEPH C. EVERSTON v. THE CENTRAL BANK OF KANSAS
• Decision Date: 10 April 1885
• Court: United States State Supreme Court of Kansas

6 P. 605

33 Kan. 352

JOSEPH C. EVERSTON v. THE CENTRAL BANK OF KANSAS

Supreme Court of Kansas

April 10, 1885

Error from Butler District Court.

THE findings of fact and conclusions of law made by the district court at the January Term, 1884, upon the trial of this case read as follows:

FINDINGS OF FACT.

"First On the first day of January, 1881, William DeMoss was the owner of the S.W. 1/4 of section 10, township 28 south, of range 4 east, in Butler county, Kansas; and on that day, with his wife, executed and delivered to the Hartford Life and Annuity Insurance Company a mortgage on said land, to secure the payment of the sum of three hundred dollars five years thereafter, and interest thereon at the rate of nine per cent. per annum from said date.

"Second Afterward, and on or about the 24th day of March, 1881, one S. M. LeMoines, without the authority, knowledge or consent of DeMoss or his wife, caused to be forged and placed upon record in the office of the register of deeds of Butler county, Kansas, a deed purporting to be a conveyance of said property from said DeMoss and wife to Charles F. Himes defendant herein.

"Third: Afterward, and on the 15th day of April, 1881, the said LeMoines caused to be forged a mortgage upon said property purporting to have been executed by said Himes and his wife to A. Prescott, one of the original defendants herein, to secure the payment of the sum of six hundred dollars and interest thereon from April 15th, 1881, at eight per cent. per annum, and presented said mortgage and a negotiable note for said sum purporting to be executed by said Himes and wife, and secured by said mortgage, as the genuine note and mortgage of said Charles F. Himes and wife, and procured the said Prescott to loan the sum of six hundred dollars thereon. The said Prescott, believing said note and mortgage to be genuine, and that said Himes had good title to said property, and on the faith thereof, loaned said sum of six hundred dollars thereon, and, as a part of said loan, advanced and paid the said Hartford Life and Annuity Insurance Company the sum of dollars in full payment and discharge of said insurance company's said mortgage, and procured a release and discharge of said insurance company's mortgage to be made and entered of record in the office of said register of deeds on the 9th day of June, 1881. The said mortgage from Himes and wife to Prescott was entered of record in said office of register of deeds, on the 27th day of April, 1881.

"Fourth: The Central Bank of Kansas, defendant, became the owner of said Prescott mortgage by assignment in the regular course of business, and in good faith, prior to the commencement of this action; but when the defendant Central Bank of Kansas became the owner of said mortgage it did not purchase the same relying upon any right of subrogation to the rights of the Hartford Life and Annuity Insurance Company, but believing said mortgage was genuine and valid. Neither said Prescott nor said defendant bank had notice of said forgeries, prior to the commencement of this action. The said Prescott was not guilty of negligence in making said loan, or in the payment of said insurance company mortgage.

"Fifth: A conveyance of said property was made by said Himes and wife to the present plaintiff, Everston, on the 26th day of July, 1882, and a quitclaim deed of the property was made by DeMoss and wife to Everston on the 28th day of March, 1883. In purchasing the property from Himes, the plaintiff, Everston, relied upon the assurance of Himes that the mortgage purporting to have been made by Himes to Prescott was a forgery and void. When the plaintiff, Everston, purchased and received the conveyance of said property from DeMoss, he knew the pretended deed from DeMoss and wife to Himes was a forgery. This action was commenced on the 28th day of July, 1882.

"Sixth: Neither the original plaintiff, DeMoss, nor the present plaintiff, Everston, have ever paid any part of the principal or interest secured by the insurance company's mortgage, either to said insurance company, or to said Prescott, or to the defendant bank. No part of the money so advanced and paid by Prescott to pay off and discharge said insurance company's mortgage has ever been repaid, either to Prescott or to defendant bank.

"Seventh: Prior to the commencement of this action, by the terms of said insurance company's mortgage several installments of interest had fallen due thereon, and by the terms of said mortgage the whole indebtedness secured thereby became due at the option of the holder thereof upon the non-payment of any interest."

CONCLUSIONS OF LAW.

"First: The said Prescott advanced the money and paid and secured the release and discharge of said insurance company's mortgage by reason of an innocent mistake of fact, and upon the belief that such payment was necessary to protect an interest of his own in the property, and not as a mere volunteer, and became thereby entitled to be subrogated to the rights of the Hartford Life and Annuity Insurance Company; and that such right of subrogation passed by assignment of said mortgage to all subsequent holders thereof.

"Second: When the plaintiff Everston became the owner of said property, he was charged with constructive notice of the rights of said Prescott and his assignees in the property, whatever those rights were.

"Third: The defendant Central Bank of Kansas is entitled, by subrogation, to be substituted to the rights of the Hartford Life and Annuity Insurance Company and its mortgage lien in and upon the property to secure the repayment of the sum of money due upon said insurance company's mortgage and paid by said A. Prescott, and interest on the amount so paid from the date of such payment to the present time, at the rate of seven per cent. per annum."

Judgment was rendered in accordance with these findings and conclusions. The other facts of this case are sufficiently stated in the opinion of the court. Everston brings the case here.

Judgment affirmed.

A. L. Redden, and T. O. Shinn, for plaintiff in error.

Peck, Johnson & McFarland, for defendant in error.

VALENTINE J. All the Justices concurring.

OPINION

VALENTINE, J.:

This was an action brought in the district court of Butler county, on July 28, 1882, by William DeMoss against Charles F. Himes, Jane Himes his wife, and A. Prescott, to quiet DeMoss's title to certain real estate owned by him, and to have a certain supposed deed and supposed mortgage thereon declared null and void. While the suit was pending in the district court, DeMoss disposed of all his interest in the property in controversy to Joseph C. Everston, and A. Prescott died; and Everston was then substituted as plaintiff in the action in the place of DeMoss, and the Central Bank of Kansas, the owner of said mortgage and the supposed successor in interest to Prescott, was substituted as a defendant in the action in the place of Prescott. All the defendants answered. The Central Bank filed an elaborate answer, setting forth facts sufficient to authorize all the proceedings afterward had, and the judgment afterward rendered by the court below in favor of the bank, provided the decision of the court below with regard to the ultimate rights of the parties is correct.

It appears that on January 1, 1881, DeMoss, being the owner of the land in controversy, gave a mortgage thereon to the Hartford Life and Annuity Insurance Company to secure the payment of $ 300. Subsequently, Prescott, on the faith of a supposed deed from DeMoss to Himes, and a supposed mortgage from Himes to himself on said land, loaned $ 600 thereon, and out of said loan paid off the mortgage held by the insurance company, and procured a release of record of the same. The deed from DeMoss to Himes, and the mortgage from Himes to Prescott, were forgeries. The bank became the owner of the mortgage to Prescott and of the notes secured by the same by assignment, in the regular course of business, in good faith, and before the commencement of this action. Everston obtained a warranty deed to the land from Himes two days before the commencement of this action; and some eight months thereafter he obtained a quitclaim deed to the land from DeMoss, having at the time full notice of all the rights and claims of Prescott and his assignees in and to the land. No part of the money advanced by Prescott has ever been paid. The case was tried before the court without a jury, and the court, after making special findings of fact and conclusions of law, rendered its judgment subrogating the bank to all the rights of the insurance company, including its mortgage lien, and decreed that the bank should have a lien on the premises for the amount of the insurance company's mortgage, which Prescott had paid, with interest from the date of such payment at 7 per cent. per annum, and ordered that the property be sold to satisfy this judgment. The only question now presented to this court is, whether the bank, under the facts of this case, is entitled to be so subrogated.

It is claimed by the plaintiff, Everston, that such subrogation cannot be had: First, for the reason that Prescott himself, if he had continued to hold the mortgage which he took from Himes, would not be entitled to such subrogation; second, that even if such right of subrogation existed in favor of Prescott, it could not be transferred in any manner to the bank, and was not so transferred either in law or equity. We shall consider these questions in their order.

I. We do not understand that the plaintiff, Everston, claims that he is entitled to any more or greater rights in or to the property in controversy than the original plaintiff, DeMoss would be entitled to were he still the owner of the...